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Economic in Cambodia

Economic opportunities in Cambodia, one always needs to look at them in the context of Cambodia’s larger relationship with the region. In 1999, Cambodia became a member of the Asso-ciation of South-East Asian Nations (ASEAN), a political group-ing which groups 10 countries with a total population of about 550 million and a GDP of something under $600 billion — at purchasing power parity, $1.8 trillion. The Asia Free Trade Area (AFTA) is the economic manifestation of area economic integration. Under agreements, which give Cambodia a phase in period to protect local companies, the Cambodian govern-ment will reduce most tariffs on Cambodia’s exports to its neighbors to between 0 and

5% by 2010 or before and will abolish them altogether by 2018. The much later China-ASEAN Free Trade Area (CAFTA), will come into effect in 2010 andwill create a trading block of 1.7 billion people. Talks under way between India and ASEAN could create another trading relationship almost as large. In addition, as an LDC, Cambodia has preferential access to some of the world’s richest markets for a number of products.

Cambodia is one of the most open economies in a generally very open economic region. According to the Heritage Foundation Index of Economic Freedom which is complied annually Cambodia

ranked 35th among 170 countries in 2003 in terms of economic free-dom. This puts it on a par with Japan and well ahead of several of

its neighbors (Malaysia, 72nd; Indonesia, 99th; VietNam, 135th; and

Lao People’s Democratic Republic, 153rd). The Index noted the Cam-bodian government’s positive policies in terms of the level of fiscal burden, labor market restriction, regulatory barriers and trade policy. This is not to say that Cambodia is not without problems similar to many poor less developed countries (LDCs) such as poor health care, limited infrastructure, low government salaries, etc. but at least with respect to doing business the country does offer a progressive welcome to investors. Emblematic of this welcome, according to the Index, Cambodia is at the top of the chart among world’s LDCs in market-friendliness.

Why doing business in Cambodia?

The short answer is low wages, liberal government policy on business, access to larger markets, and a country that offers extensive opportunities

for tourism. The large markets are a function of location and access to

AFTA described. Cambodia also has preferential access to the lucrative